The meeting is expected to be attended by investors, economists etc at which the government’s outlook on United States supply and demand are expected to be discussed.
Benchmark West Texas Inter-mediate for July delivery lost 86 cents at US$99.36 per barrel in afternoon trading on the New York Mercantile Exchange. Crude has hovered around that level for a month.
A stronger dollar pushed oil lower. TransCanada Corporation also said its Keystone Pipeline was back online after a minor oil spill at a pump station in Kansas. The pipeline delivers a half million barrels of oil per day to the US from Alberta, feeding supplies to the delivery point for benchmark oil in Cushing, Oklahoma. The 1,300-mile pipeline was taken offline twice in the last month as TransCanada dealt with leaks.
Analysts are looking for clues on what OPEC will do about oil production when the cartel meets Wednesday in Vienna. OPEC ministers could decide to try to push oil prices lower by increasing production. OPEC officials have said that they believe oil prices are too high and threaten global economic recovery.
“You have a lot of money sitting on the side lines right now ahead of that meeting,” analyst Stephen Schork said.
It’s unclear how prices would react to more OPEC production. By pumping more oil, OPEC could make up for the loss of exports from Libya that were cut off by unrest that began there in February. Experts point out though that boosting production now could make it harder for the cartel to provide more crude later as global demand increases.
Major oil investors like Goldman Sachs predict that oil prices will rise in the next 18 months as OPEC closes in on its maximum production capacity.
The US Energy Department releases its monthly short-term energy outlook on Tuesday and weekly petroleum inventories on Wednesday. The recent trend has been for rising supplies and falling demand.
(Parts of this article were written with content submitted in a Jamaica Gleaner publication)